----

**SECURITIES AND EXCHANGE COMMISSION**Washington, DC 20549

**Form10‐Q**

****

****

QuarterlyReport Under Section 13 or 15(d)of the Securities Exchange Act of 1934

  
| For QuarterEnded June 30, 2002 |  | CommissionFile Number 0‐8640 |
|--------------------------------|--|------------------------------------|

**SYNCORINTERNATIONAL CORPORATION**(Exact name of registrant as specified inits charter)

|                                                   |                                                       |                                     |
|---------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
| **Delaware**                                      |                                                                                                                                                                                                                                                                                                                                | **85‐0229124**                |
| (State orother jurisdiction of                    |                                                                                                                                                                                                                                                                                                                                | (I.R.S.Employer Identification No.) |
| incorporation or organization)                    |                                                                                                                                                                                                                                                                                                                                |                                     |
|                                                   |                                                                                                                                                                                                                                                                                                                                |                                     |
| **6464Canoga Avenue, Woodland Hills, California** |                                                                                                                                                                                                                                                                                                                                | **91367**                           |
| (Address ofprincipal executive offices)           |                                                                                                                                                                                                                                                                                                                                | (ZipCode)                           |
|                                                   |                                                                                                                                                                                                                                                                                                                                |                                     |

  

**(818)737-4000**(Registrant's telephone number, includingarea code)

  

Indicate by check markwhether the Registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90days.

**Yes   X    No ___**

  

Indicate the number ofshares outstanding of each of the issuer's classes of common stock,as of the latest practicable date.  As of July 31, 2002,25,404,647 shares of $.05 par value common stock wereoutstanding.

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1

**SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIES**

****

****

**INDEX**
|                                                                                                                                                  |                                                                                                                                                                                                                                                                            |                                                  | **Page** |
|--------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|----------|
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  | PartI.    Financial Information                                                                                                                                                                                                                        |                                                  |          |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                          |        Item1.  Condensed Consolidated FinancialStatements                                                                                                                                                                     |          |          |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  |                BalanceSheets as of June 30, 2002 and December 31,2001.........................                                                          |                                                  | 3        |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  |                Statementsof Income for Three Months Ended June 30, 2002 and2001...........                                                                                       |                                                  | 4        |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  |                Statementsof Income for Six Months Ended June 30, 2002 and2001..............                                                                                 |                                                  | 5        |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  |                Statementsof Cash Flows for Six Months Ended June 30, 2002 and2001.........                                                                                       |                                                  | 6        |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  |                Notesto Condensed Consolidated FinancialStatements..............................                                               |                                                  | 7        |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  |        Item2.  Management’s Discussion and Analysis ofFinancialCondition.................                                                                                                      |                                                  | 13       |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  |        Item3.  Quantitative and Qualitative Disclosures about MarketRisk.....................                                                                                              |                                                  | 18       |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  | PartII.   OtherInformation............................................................................                         |                                                  | 19       |
|                                                                                                                                        |                                                                                                                                                                                                                                                                            |                                                  |          |
|                                                                                                                                                  | Signature................................................................................................. |                                                  | 21       |

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2

**Item 1.**

****

**SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets**(in thousands)
|                                                                                                                | **         ** | **June 30,2002**              | **     ** | **December 31,2001** |   |
|----------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|-------------------------------|------------------------------------|----------------------|---|
|                                                                                                                |                                                            | ****                          |                                    |                      |   |
|                                                                                                                |                                                            | **(Unaudited)**               |                                    |                      |   |
| **ASSETS**                                                                                                     |                                                            |                               |                                    |                      |   |
| Current assets:                                                                                                |                                                            |                               |                                    |                      |   |
|        Cashand cash equivalents                                             |                                                            | **$   10,000** |                                    | $  17,634  |   |
|        Short‐terminvestments                                          |                                                            | **6,754**                     |                                    | 10,215               |   |
|        Tradereceivables, net                                                |                                                            | **113,057**                   |                                    |  97,003         |   |
|        Inventory                                                            |                                                            | **28,224**                    |                                    | 28,879               |   |
|        Prepaidsand other current assets                                     |                                                            | **22,106**                    |                                    | 19,215               |   |
|        Totalassets – discontinued operations (note 3)                 |                                                            | **283,541**                   |                                    | 283,154              |   |
|                                                                                                                |                                                            | ****                          |                                    |                      |   |
|             Total currentassets                    |                                                            | **463,682**                   |                                    | 456,100              |   |
|                                                                                                      |                                                            |                               |                                    |                      |   |
| Marketable investmentsecurities                                                                                |                                                            | **508**                       |                                    | 1,006                |   |
| Property and equipment,net                                                                                     |                                                            | ** 96,677**              |                                    | 86,812               |   |
| Excess of purchase priceover net assets acquired, net                                                          |                                                            | ** 35,771**              |                                    | 30,498               |   |
| Other assets                                                                                                   |                                                            | ** 14,543**              |                                    | 13,425               |   |
|                                                                                                                |                                                            | ****                          |                                    |                      |   |
|                                                    |                                                            | **$611,181**                  |                                    | $587,841             |   |
|                                                                                                                |                                                            | ****                          |                                    |                      |   |
|                                                                                                                |                                                            |                               |                                    |                      |   |
| **LIABILITIES ANDSTOCKHOLDERS' EQUITY**                                                                        |                                                            |                               |                                    |                      |   |
| Currentliabilities:                                                                                            |                                                            |                               |                                    |                      |   |
|        Accountspayable                                                      |                                                            | **$  67,549**       |                                    | $  62,021  |   |
|        Accruedliabilities                                                   |                                                            | **45,226**                    |                                    | 13,982               |   |
|        Accruedwages and related costs                                       |                                                            | **15,225**                    |                                    | 13,149               |   |
|        Federaland state taxes payable                                       |                                                            | **7,421**                     |                                    | 4,530                |   |
|        Currentmaturities of long-term debt                                  |                                                            | ** 1,897**               |                                    |  6,345          |   |
|        Totalliabilities – discontinued operations (note 3)            |                                                            | **209,595**                   |                                    | 215,635              |   |
|                                                                                                                |                                                            | ****                          |                                    |                      |   |
|             Totalcurrent liabilities:              |                                                            | **346,913**                   |                                    | 315,662              |   |
|                                                                                                      |                                                            |                               |                                    |                      |   |
| Long-term debt, net ofcurrent maturities                                                                       |                                                            | ** 31,493**              |                                    |  35,118         |   |
| Deferred taxes                                                                                                 |                                                            | ** 2,439**               |                                    | 2,233                |   |
|                                                                                                                |                                                            |                               |                                    |                      |   |
| Stockholders'equity:                                                                                           |                                                            |                               |                                    |                      |   |
|        Commonstock, $.05 par value                                          |                                                            | **1,428**                     |                                    | 1,420                |   |
|        Additionalpaid-in capital                                            |                                                            | **127,193**                   |                                    | 124,909              |   |
|        Notesreceivable-related parties                                      |                                                            | **(3,337**                    | **)**                              | (6,197               | ) |
|        Accumulatedother comprehensive income                                |                                                            | **(4,814**                    | **)**                              | (3,653               | ) |
|        Retainedearnings                                                     |                                                            | **147,802**                   |                                    | 151,888              |   |
|        Treasurystock, at cost; 3,750 shares at June 30, 2002 and            |                                                            |                               |                                    |                      |   |
|              3,575shares at December 31, 2001 |                                                            | **(37,936**                   | **)**                              | (33,539              | ) |
|                                                                                                                |                                                            | ****                          |                                    |                      |   |
|             Totalstockholders' equity              |                                                            | **230,336**                   |                                    | 234,828              |   |
|                                                                                                                |                                                            | ****                          |                                    |                      |   |
|                                                                                                                |                                                            | **$611,181**                  |                                    | $587,841             |   |
|                                                                                                                |                                                            | ****                          |                                    |                      |   |

  

*See notes to condensedconsolidated financial statements.*

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3

**SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Income(Unaudited)**(in thousands, except per sharedata)
|                                                                                                                                                                                                                                                                                                                                                                            |                                | **THREEMONTHS ENDED JUNE 30, ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                            |       | **2002**                             |       | 2001 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
|                                                                                                                                                                                                                                                                                                                                                                  |                                |                                      |  |  |  |   |
| Net sales                                                                                                                                                                                                                                                                                                                                                                  |                                | **$189,322**                         |  | $144,377 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Cost of sales                                                                                                                                                                                                                                                                                                                                                              |                                | **128,728**                          |  | 100,320 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
|        Grossprofit                                                                                                                                                                                                                                                                                                                      |                                | **60,594**                           |  | 44,057 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Operating, selling andadministrativeexpenses                                                      |                                | **42,008**                           |  | 23,584 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Depreciation andamortization                                                                                                                                                                                                                                                                                                                                               |                                | **4,789**                            |  | 3,616 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
|        Operatingincome                                                                                                                                                                                                                                                                                                                  |                                | **13,797**                           |  | 16,857 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Other income (expense),net                                                                                                                                                                                                                                                                                                                                                 |                                | **169**                              |  | (548 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Income from continuingoperations                                                                                                                                                                                                                                                                                                                                           |                                | **13,966**                           |  | 16,309 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Provision for incometaxes                                                                                                                                                                                                                                                                                                                                                  |                                | **5,377**                            |  | 6,184 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Income from continuingoperations after tax                                                                                                                                                                                                                                                                                                                                 |                                | **$8,589**                           |  | $10,125 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Income (loss) fromdiscontinued operations, net of taxes                                                                                                                                                                                                                                                                                                                    |                                | **(23,583**                          | **)** | 857 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Net income(loss)                                                                                                                                                                                                                                                                                                                                                           |                                | **(14,994**                          | **)** | 10,982 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Net income (loss) pershare – Basic:                                                                                                                                                                                                                                                                                                                                  |                                |                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |  |
|        Continuingoperations                                                                                                                                                                                                                                                                                                             |                                | **$0.36**                            |  | $0.41 |  |  |
|        Discontinuedoperations                                                                                                                                                                                                                                                                                                           |                                | **($0.95**                           | **)** | $0.03 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Net income (loss) pershare                                                                                                                                                                                                                                                                                                                                                 |                                | **($0.61**                           | **)** | $0.44 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Net income (loss) pershare – Diluted:                                                                                                                                                                                                                                                                                                                                |                                |                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |  |
|        Continuingoperations                                                                                                                                                                                                                                                                                                             |                                | **$0.32**                            |  | $0.38 |  |  |
|        Discontinuedoperations                                                                                                                                                                                                                                                                                                           |                                | **($0.88**                           | **)** | $0.03 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Net income (loss) pershare                                                                                                                                                                                                                                                                                                                                                 |                                | **($0.56**                           | **)** | $0.41 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Weighted average sharesoutstanding – Basic                                                                                                                                                                                                                                                                                                                           |                                | **24,782**                           |  | 24,766 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |
| Weighted average sharesoutstanding – Diluted                                                                                                                                                                                                                                                                                                                         |                                | **26,880**                           |  | 26,936 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                      |  |  |  |   |

**  **

*See notes to condensedconsolidated financial statements.*

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4

**SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Income(Unaudited)**(in thousands, except per sharedata)
|                                                                                                                                                                                                                                                                                                                                                                            |                                | **SIXMONTHS ENDED JUNE 30, ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                            |       | **2002**                           |       | 2001 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
|                                                                                                                                                                                                                                                                                                                                                                  |                                |                                    |  |  |  |   |
| Net sales                                                                                                                                                                                                                                                                                                                                                                  |                                | **$362,900**                       |  | $284,470 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Cost of sales                                                                                                                                                                                                                                                                                                                                                              |                                | **247,302**                        |  | 198,194 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
|        Grossprofit                                                                                                                                                                                                                                                                                                                      |                                | **115,598**                        |  | 86,276 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Operating, selling andadministrativeexpenses                                                      |                                | **74,359**                         |  | 45,352 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Depreciation andamortization                                                                                                                                                                                                                                                                                                                                               |                                | **9,602**                          |  | 7,323 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
|        Operatingincome                                                                                                                                                                                                                                                                                                                  |                                | **31,637**                         |  | 33,601 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Other expense,net                                                                                                                                                                                                                                                                                                                                                          |                                | **(915**                           | **)** | (1,508 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Income from continuingoperations                                                                                                                                                                                                                                                                                                                                           |                                | **30,722**                         |  | 32,093 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Provision for incometaxes                                                                                                                                                                                                                                                                                                                                                  |                                | **11,827**                         |  | 12,506 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Income from continuingoperations after taxes                                                                                                                                                                                                                                                                                                                               |                                | **$18,895**                        |  | $19,587 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Income (loss) fromdiscontinued operations, net of taxes                                                                                                                                                                                                                                                                                                                    |                                | **(22,981**                        | **)** | 1,602 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |  |
| Net income(loss)                                                                                                                                                                                                                                                                                                                                                           |                                | **(4,086**                         | **)** | 21,189 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Net income (loss) pershare – Basic:                                                                                                                                                                                                                                                                                                                                  |                                |                                    |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |  |
|        Continuingoperations                                                                                                                                                                                                                                                                                                             |                                | **$0.76**                          |  | $0.80 |  |  |
|        Discontinuedoperations                                                                                                                                                                                                                                                                                                           |                                | **($0.93**                         | **)** | $0.07 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Net income (loss) pershare                                                                                                                                                                                                                                                                                                                                                 |                                | **($0.17**                         | **)** | $0.87 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Net income (loss) pershare – Diluted:                                                                                                                                                                                                                                                                                                                                |                                |                                    |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |  |
|        Continuingoperations                                                                                                                                                                                                                                                                                                             |                                | **$0.71**                          |  | $0.73 |  |  |
|        Discontinuedoperations                                                                                                                                                                                                                                                                                                           |                                | **($0.86**                         | **)** | $0.06 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Net income (loss) pershare                                                                                                                                                                                                                                                                                                                                                 |                                | **($0.15**                         | **)** | $0.78 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Weighted average sharesoutstanding – Basic                                                                                                                                                                                                                                                                                                                           |                                | **24,774**                         |  | 24,439 |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |
| Weighted average sharesoutstanding – Diluted                                                                                                                                                                                                                                                                                                                         |                                | **26,786**                         |  | 27,008 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                                |                                    |  |  |  |   |

**  **

*See notes to condensedconsolidated financial statements.*

----

5

**SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows(Unaudited)******(in thousands)
|                                                                                                                      | **SIXMONTHS ENDED JUNE 30,   **                                                 |
|----------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                                                                                      | **               ** | **2002** |                | 2001 |  |   |
| Cash flows from operatingactivities:                                                                                 |                                                                                                |  |  |  |  |   |
| Net income(loss)                                                                                                     |                                                                                                | **($4,086)** |  | $21,189 |  |   |
| Adjustments to reconcilenet income (loss) to net                                                                     |                                                                                                |  |  |  |  |   |
|     cash provided byoperating activities:                                                        |                                                                                                |  |  |  |  |   |
|         Loss(income) from discontinued operations                            |                                                                                                | **22,981** |  | (1,602) |  |  |
|         Depreciationand amortization                                         |                                                                                                | **9,602** |  | 7,323 |  |   |
|         Provisionfor losses on receivables                                   |                                                                                                | **798** |  | 363 |  |   |
|         Amortizationof loan guarantee                                        |                                                                                                | **-** |  | 842 |  |   |
|         Changesin operating assets and liabilities, net ofacquisitions:      |                                                                                                |  |  |  |  |   |
|               Tradereceivables                 |                                                                                                | **(17,444** | **)** | (12,379 | ) |   |
|               Inventory                        |                                                                                                | **534** |  | 42,270 |  |   |
|               Prepaidsand other current assets |                                                                                                | **(2,936)** |  | (2,522 | ) |   |
|               Otherassets                      |                                                                                                | **(238** | **)** | 1,781 |  |   |
|               Accountspayable                  |                                                                                                | **5,496** |  | (24,156 | ) |   |
|               Accruedliabilities               |                                                                                                | **32,596** |  | (1,768 | ) |   |
|               Accruedwages and related costs   |                                                                                                | **2,086** |  | (6,438 | ) |   |
|               Federaland state taxes payable   |                                                                                                | **4,143** |  | 1,452 |  |   |
|               Deferredtaxes                    |                                                                                                | **206** |  | 1,476 |  |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
|     Net cash provided byoperating activities                                                     |                                                                                                | **53,738** |  | 27,831 |  |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
| Cash flows from investingactivities:                                                                                 |                                                                                                |  |  |  |  |   |
|         Purchaseof property and equipment, net                               |                                                                                                | **(14,242** | **)** | (15,910 | ) |   |
|         Acquisitionsof businesses, net of cash acquired                      |                                                                                                | **(6,446** | **)** | (4,765 | ) |   |
|         Netdecrease (increase) in short-term investments                     |                                                                                                | **3,428** |  | (1,297 | ) |   |
|         Netdecrease (increase) long-term investment                          |                                                                                                | **498** |  | (3 | ) |   |
|         Unrealizedgain on investments                                        |                                                                                                | **2** |  | 3 |  |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
|         Netcash used in investing activities                                 |                                                                                                | **(16,760** | **)** | (21,972 | ) |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
| Cash flow from financingactivities:                                                                                  |                                                                                                |  |  |  |  |   |
|         Proceedsfrom long-term debt                                          |                                                                                                | **-** |  | 39,362 |  |   |
|         Repaymentof long-term debt                                           |                                                                                                | **(12,862** | **)** | (6,622 | ) |   |
|         Notesreceivable-related parties                                      |                                                                                                | **2,860** |  | 11,469 |  |   |
|         Issuanceof common stock                                              |                                                                                                | **1,118** |  | 5,320 |  |   |
|         Reacquisitionof common stock for treasury                            |                                                                                                | **(4,397** | **)** | (13,927 | ) |   |
|         Loansto discontinued operations                                      |                                                                                                | **(27,288** | **)** | (35,101 | ) |  |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
|         Netcash (used in) provided by financing activities                   |                                                                                                | **(40,569** | **)** | 501 |  |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
|         Netdecrease in cash and cash equivalents                             |                                                                                                | **(3,591** | **)** | 6,360 |  |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
|         Effectof exchange rate on cash                                       |                                                                                                | **290** |  | (50 | ) |   |
|                                                                                                                      |                                                                                                |  |  |  |  |  |
|         Cashfrom discontinued operations                                     |                                                                                                | **1,381** |  | 3,099 |  |  |
|                                                                                                                      |                                                                                                |  |  |  |  |  |
|         Cashand cash equivalents at beginning of period                      |                                                                                                | **11,920** |  | 19,498 |  |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |
|         Cashand cash equivalents at end of period                            |                                                                                                | **$ 10,000** |  | $28,907 |  |   |
|                                                                                                                      |                                                                                                |  |  |  |  |   |

**

*See notes to condensedconsolidated financial statements.*

----

6

****

****
| **                                              ** | **SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIES**    |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|--|
| **                                              ** | **Notes toCondensed Consolidated Financial Statements** |  |

****

****

****

****

1.            **GENERAL.**  The accompanying unaudited condensedconsolidated financial statements have been prepared in accordancewith accounting principles generally accepted in the United Statesof America for interim financial information and with theinstructions to Form 10‐Q.  Accordingly, they do notinclude all of the information and footnotes required by accountingprinciples generally accepted in the United States of America forcomplete financial statements.  In the opinion of management,all adjustments (consisting only of normal recurring accruals)considered necessary for a fair presentation have been included.The results for the six months ended June 30, 2002, are notnecessarily indicative of the results to be expected for the fullyear.  For further information, refer to the consolidatedfinancial statements and footnotes thereto included in our AnnualReport on Form 10-K for the year ended December 31, 2001. Certainline items in the prior year’s consolidated condensedfinancial statements have been reclassified to conform to thecurrent year’s presentation.

2.**            SUMMARY OF CRITICAL ACCOUNTING ESTIMATES.**

Our criticalaccounting estimates are as follows:

**RevenueRecognition*.***We recognize our revenue primarily from two sources:(i) product revenue, which includes sales from our radiopharmaciesand (ii) services revenue, primarily from our imaging business. Asdescribed below, significant judgments and estimates must be usedby management in connection with the revenue recognized in anyperiod for the imaging business. Material differences may impactthe amount of revenue recorded in any period if managementjudgments or estimates are significantly different thanactual.

We provideimaging services to patients that generally have medical insurancethrough a governmental payor, managed care payor, or a commercialthird-party payor.  Our medical imaging business, (see in note3 below) has several hundred contracts.  These contracts canchange or be amended frequently due to changes in the payors’or governmental agencies’ reimbursement.  Additionally,as we acquired medical imaging centers, new contracts had to beentered into our computer systems.  Until these contracts havebeen updated in our systems, we need to make estimates about theanticipated contracted amounts that we would ultimately receivefrom all of our various payors.  This requires us to recordestimates when recording imaging revenues based upon historicaldata and trends.   These estimates are continuallyevaluated and compared to actual reimbursements from the variouspayors to ensure that we have properly recorded revenues andappropriately adjusted for shifts in our payor mix. Accordingly, these recorded revenues are based on currentinformation available, but subject to estimation, which may lead toadjustments in future periods as actual reimbursement rates aredetermined.  Adjustments were made in these estimates in thesecond quarter of 2002 for contractual reimbursement rates of $2.4million (note 3).

**Estimating Valuation Allowances for DoubtfulAccounts***.*The preparation of financial statements requires ourmanagement to make estimates and assumptions on the collectibilityof our accounts receivable. Management specifically analyzeshistorical bad debts, customer concentrations, customercredit-worthiness, current economic trends, aging of accounts andchanges in payment terms when evaluating the adequacy of theallowance for doubtful accounts. Any changes in these estimates orassumptions could cause material differences in recordedallowances. During the second quarter of 2002 we increased our baddebt reserves for the imaging business in an amount of $7.0 million(note 3) to better reflect our current estimates ofcollectibility.

**Valuation of Long-LivedAssets and Goodwill*.***  Weassess the impairment of identifiable intangibles, long-livedassets and related goodwill and enterprise level goodwill wheneverevents or changes in circumstances indicate that the carrying valuemay not be recoverable. Factors we consider important which couldtrigger an impairment review include the following:
|           | •     | significantunderperformance relative to expected historical or projectedfuture operating results;           |
|--------------------------------------------------------|--------------------------------|-------------------------------------------------------------------------------------------------------------|
|                                                   | •     | significant changes in themanner of our use of the acquired assets or the strategy for ouroverall business; |
|                                                   | •     | significant negativeindustry or economic trends; and                                                        |
|                                                   | •     | our market capitalizationrelative to net book value.                                                        |
|                                                        |                                |                                                                                                             |
|                                                        |                                |                                                                                                             |

----

7

3.            **DISCONTINUED OPERATIONS AND OTHER CHARGES.**  During thesecond quarter of 2002, we decided to discontinue certainoperations including our medical imaging business-CMI  (aseparate segment for reporting purposes), certain overseaslocations and the brachytherapy seeds manufacturing operations ofthe Pharmacy Services Business. We have recorded after tax chargesin discontinued operations for severance, impairment of assets heldfor sale and other charges totaling $24.9 million or $0.93 perfully diluted share. Included in discontinued operations was a netafter tax charge of $11.2 million or $0.42 per fully diluted sharefor additional provision for the allowance of uncollectibleaccounts and contractual allowances, system abandonment andseverance expenses related to CMI. In addition, the discontinuedoperations includes a net after tax charge of $13.2 million, or$0.49 per fully diluted share, for the reorganization ofinternational operations including severance related costs andimpairment of assets held for disposal, and $0.5 million, or $0.02per fully diluted share for abandonment of the brachytherapy seedsmanufacturing operations of the Pharmacy Services Business.Offsetting these charges for the quarter and year to date, was netincome after tax from these discontinued operations of $1.3million, or $0.05 per fully diluted share for the three monthsended June 30, 2002 and $1.9 million, or $0.07 per fully dilutedshare for the six months ended June 30, 2002. The net effect ofthese transactions were a loss of $0.88 per fully diluted share forthe three months ended June 30, 2002 and $0.86 per fully dilutedshare for the six months ended June 30, 2002.

Included in continuingoperations for the second quarter was a special charge to earningsof $5.0 million ($3.1 million net of tax or $0.11 per fully dilutedshare) related to the reorganization of the IT division, corporateseverance for former executives and certain expenses related to thepending Cardinal Health, Inc. merger transaction.

The following representsincome statement data from the discontinued operations:

**Income statementdata:**
|                                          |                                                  | **For Three MonthsEnded** |   | **For Six MonthsEnded**            |
|------------------------------------------|--------------------------------------------------|---------------------------|---|------------------------------------|
|                                          |                                                  | **6/30/2002**             |   | **6/30/2001**                      |  | **6/30/2002** |  | **6/30/2001** |
|                                          |                                                  |                           |   |                                    |  |  |  |  |
| Revenues                                 |                                                  | $40,157                   |   | $43,315                            |  | $  82,063 |  | $84,638 |
| Costs andexpenses                        |          | 72,265                    |   | 41,901                             |          | 113,189 |  | 81,997 |
|                                          |                                                  |                           |   |                                    |  |  |  |  |
| Operating income(loss)                   |                                                  | (32,108                   | ) | 1,414                              |  | (31,126 | ) | 2,641 |
| Income tax expense(benefit)              |                                                  | (8,525                    | ) | 557                                |  | (8,145 | ) | 1,039 |
|                                          |                                                  |                           |   |                                    |  |  |  |  |
| Income (loss)from                        |                                                  |                           |   |                                    |  |  |  |  |
|    discontinuedoperations |                                                  | ($23,583                  | ) | $     857 |  | ($22,981 | ) | $  1,602 |

The assets, liabilitiesand stockholder’s equity of these discontinued operationshave been included on the face of the balance sheet and consist ofthe following:
|                             |                                                                                            | **June 30,2002**    |                                                              | **December31, 2001** |
|-----------------------------|--------------------------------------------------------------------------------------------|---------------------|--------------------------------------------------------------|----------------------|
|                             |                                                                                            |                     |                                                              |                      |
| Current assets              |                                                                                            | $  68,673 |                                                              | $  74,450  |
| Property andequipment       |                 | 96,046              |            | 90,552               |
| Intangibles andgoodwill     |                                                                                            | 118,822             |                                                              | 118,152              |
|                             |                                                                                            |                     |                                                              |                      |
| Total assets                |                                                                                            | $283,541            |                                                              | $283,154             |
|                             |                                                                                            |                     |                                                              |                      |
| Currentliabilities          |                                                                                            | $  34,114 |                                                              | $  30,088  |
| Long-term debt              |                                                                                            | 163,397             |                                                              | 175,531              |
| Otherliabilities            |                                                                   | 12,084              |                                                              | 10,016               |
| Stockholdersequity          |                                                                                            | 73,946              |                                                              | 67,519               |
|                             |                                                                                            |                     |                                                              |                      |
| Total liabilities andequity |                                                                                            | $283,541            |                                                              | $283,154             |

****

Approximately $94 millionand $67 million at June 30, 2002 and December 31, 2001respectively, of intercompany debt has been reclassified tostockholders equity for purposes of this footnotedisclosure.

****

4.            **MERGER AGREEMENT. ** On June 14, 2002 we entered into anagreement and plan of merger with Cardinal Health Inc. (CardinalHealth) and its wholly owned subsidiary, Mudhen Merger Corp. Underthe terms and subject to the conditions of the agreement, we willbecome a wholly owned subsidiary of Cardinal Health. The mergeragreement provides for Syncor shareholders to receive 0.52 CardinalHealth shares for each Syncor share they own.  Pursuant tocertain terms and conditions in the merger agreement, if theagreement is terminated we could be required to pay Cardinal Healthtermination fees ranging from $4,000,000 to $24,125,000. Theobligation to pay, and the amount of such fees are based upon thecircumstances relating to the termination.  The transaction isexpected to be completed by the end of 2002, subject to thesatisfaction of customary conditions, including Syncor shareholderapproval.  Syncor’s shareholder meeting is expected totake place in the fall of 2002.

----

8

5.            **NEW ACCOUNTING STANDARDS.**  In July 2001, the Financial Accounting Standards Board(FASB) issued Statement of Accounting Standards SFAS No. 141,*Business Combinations* and SFAS No. 142 *Goodwill and OtherIntangible Assets*.  SFAS requires that the purchase methodof accounting be used for all business combinations completed afterJune 30, 2001, clarifies the recognition of intangible assetsseparately from goodwill and requires that unallocated negativegoodwill be written off immediately as an extraordinary gain. SFASNo. 142, which was effective for fiscal years beginning afterDecember 15, 2001, requires that ratable amortization of goodwillbe replaced with periodic tests of goodwill impairment and thatintangible assets, other than goodwill, which have determinableuseful lives, be amortized over their useful lives. The Company hasadopted these accounting standards effective January 1, 2002 andhas determined in the transitional impairment analysis, that basedupon the value of the proposed merger agreement and anticipatedsales values of discontinued business assets that there has been noimpairment. There were no adjustments to identifiable intangibleassets’ useful lives or recorded balances as a result of theadoption of SFAS No.142. We will perform an annual impairmentanalysis of goodwill as required by SFAS No. 142.  Thefollowing is a reconciliation of net income and earnings per sharebetween the amounts reported for the three and six months endedJune 30, 2001 and the adjusted amounts reflecting these newaccounting rules:
| *(Dollars in thousands, except per share data)*                   |               | **ThreeMonths Ended, June 30, 2001** |                                                        | **SixMonths Ended June 30, 2001** |   |
|-------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------|--------------------------------------------------------|-----------------------------------|--------|
|                                                         |                                                                           |                                      |                                                        |                                   |   |
| Net income                                                        |                                                                           |                                      |           |                                   |   |
|      Reported netincome                  |                                                                           | $10,982                              |                                                        | $21,189                           |   |
|      Goodwillamortization (net of taxes) |                                                                           | 929                                  |                                                        | 1,847                             |   |
|      Adjusted netincome                  |                                                                           | $11,911                              |                                                        | $23,036                           |   |
|                                                         |                                                                           |                                      |                                                        |                                   |   |
| Earnings per share: Basic                                    |                                                                           |                                      |                                                        |                                   |   |
|      Reported                            |                                                                           | $    0.44        |                                                        | $    0.87     |   |
|      Goodwill                            |                                                                           | 0.04                                 |                                                        | 0.08                              |   |
|      Adjusted earningsper share          |                                                                           | $    0.48        |                                                        | $    0.95     |   |
|                                                         |                                                                           |                                      |                                                        |                                   |   |
| Earnings per share: Diluted                                  |                                                                           |                                      |                                                        |                                   |   |
|      Reported                            |                                                                           | $    0.41        |                                                        | $    0.78     |   |
|      Goodwill                            |                                                                           | 0.03                                 |                                                        | 0.07                              |   |
|      Adjusted earningsper share          |                                                                           | $    0.44        |                                                        | $    0.85     |   |
|                                                                   |                                                                                |                                      |                                                        |                                   |        |

In August2001, the Financial Accounting Standards Board (FASB) issued SFASNo. 144, *Accounting for the Impairment or Disposal of Long-LivedAssets* (SFAS No. 144), which supersedes both FASB Statement No.121, *Accounting for the Impairment of Long-Lived Assets and forLong-Lived Assets to Be Disposed Of* (SFAS No. 121) and theaccounting and reporting provisions of APB Opinion No. 30,*Reporting the Results of Operations—Reporting the Effectsof Disposal of a Segment of a Business, and Extraordinary, Unusualand Infrequently Occurring Events and Transactions* (Opinion30), for the disposal of a segment of a business (as previouslydefined in that Opinion).  SFAS No. 144 retains thefundamental provisions in SFAS No. 121 for recognizing andmeasuring impairment losses on long-lived assets held for use andlong-lived assets to be disposed of by sale, while also resolvingsignificant implementation issues associated with SFAS No.121.  SFAS No. 144 retains the basic provisions of Opinion 30on how to present discontinued operations in the income statementbut broadens that presentation to include a component of an entity(rather than a segment of a business).  Unlike SFAS No. 121,an impairment assessment under SFAS No. 144 will never result in awrite-down of goodwill.  Rather, goodwill is evaluated forimpairment under SFAS No. 142, *Goodwill and Other IntangibleAssets.*

The Company is required to adopt SFAS No. 144 nolater than the year beginning after December 15, 2001. Accordingly, the Company adopted SFAS No. 144 in the first quarterof 2002.  Management does not expect the adoption of SFAS No.144 for long-lived assets held for use to have a material impact onthe Company’s financial statements because the impairmentassessment under SFAS No. 144 is largely unchanged from SFAS No.121.  The provisions of SFAS No. 144 for assets held for saleor other disposal generally are required to be appliedprospectively after the adoption date to newly initiated disposalactivities.  The adoption of SFAS No. 144 impacted us ascertain disposal groups qualified as discontinued operations andare presented accordingly in the accompanying condensedconsolidated financial statements.

On August 16, 2001, theFASB issued SFAS No. 143, *Accounting for Asset RetirementObligations*.  The statement requires entities to recordthe fair value of a liability for legal obligations associated withthe retirement obligations of tangible long-lived assets in theperiod in which it is incurred.  When the liability isinitially recorded, the entity increases the carrying amount of therelated long-lived asset.  Over time, accretion of theliability is recognized each period, and the capitalized cost isdepreciated over the useful life of the related asset.  Uponsettlement of the liability an entity either settles the obligationfor its recorded amount or incurs a gain or loss uponsettlement.  The standard is effective for fiscal yearsbeginning after June 15, 2002, with earlier applicationencouraged.  We do not expect that the adoption of SFAS No.143 will have a material impact on the Company's results fromoperations.

----

9

In April 2002, the FASBissued SFAS No. 145 *Rescission of FASB Statements No. 4, 44 and64, Amendment of FASB Statement No. 13, and TechnicalCorrections* which requires that the extinguishment of debt notbe considered an extraordinary item under Opinion 30 *Reportingthe Results of Operations - Reporting the Effects of Disposal of aSegment of Business, and Extraordinary, Unusual and InfrequentlyOccurring Events and Transactions* unless the debtextinguishment meets the unusual in nature and infrequency ofoccurrence criteria in Opinion 30. SFAS No. 145 is effective forfiscal years beginning after May 15, 2002 and upon adoption,companies must reclassify prior period items that do not meet theextraordinary item classification criteria in Opinion 30. Theadoption of SFAS No. 145 is not expected to have a material impacton our financial position and results of operations.

On July 30, 2002, FASBissued Statement of Financial Accounting Standards(“SFAS”) No. 146, *Accounting for Costs Associatedwith Exit or Disposal Activities*.  SFAS No. 146 nullifiesEITF Issue No. 94-3, *Liability Recognition for Certain EmployeeTermination Benefits and Other Costs to Exit an Activity (includingCertain Costs Incurred in a Restructuring)*.  It requiresthat a liability be recognized for those costs only when theliability is incurred, that is, when it meets the definition of aliability in the FASB’s conceptual framework.  SFAS No.146 also establishes fair value as the objective for initialmeasurement of liabilities related to exit or disposalactivities.  SFAS No.146 is effective for exit or disposalactivities that are initiated after December 31, 2002, with earlieradoption encouraged.  The Company does not expect that theadoption of SFAS No. 146 will have a material impact on itsfinancial position or results from operations.

6.            **COMPREHENSIVE INCOME (LOSS). **Other comprehensive income (loss)includes foreign currency translation adjustments and netunrealized gains and losses on investments in equity securities.Such amounts are as follows:
| **For the three monthsended:**           |                                                              |                   | **June30, 2002**                     |             |                                      | **June 30,2001**  |                                 |
|------------------------------------------|--------------------------------------------------------------|-------------------|--------------------------------------|-------------|--------------------------------------|-------------------|--------------------------------------|
|                                          |            | Before-Tax Amount |        | Tax Expense |        | Net-of-Tax Amount |        | Before-Tax Amount |        | Tax Expense |        | Net-of-Tax Amount |   |
|                                          |                                                              |                   |                                 |
| Foreign currencytranslation adjustments  |                                                              | $(1,232           | )                                    | $-          |                                      | $(1,232           | )                                    | $82 |  | $- |  | $82  |
|                                          |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |
| Unrealized gains (losses)on investments: |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |
| Unrealized holding gains(losses)         |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |
|    arisingduring period   |                                                              | 3                 |                                      | (1          | )                                    | 2                 |                                      | - |  | - |  | - |   |
|                                          |                                                              |                   |                                 |
| Other comprehensive income(loss)         |                                                              | (1,229            | )                                    | (1          | )                                    | (1,230            | )                                    | 82 |  | - |  | 82  |   |
|                                          |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |   |
| Net income(loss)                         |                                                              | (9,617            | )                                    | (5,377      | )                                    | (14,994           | )                                    | 17,166 |  | (6,184 | ) | 10,982 |   |   |
|                                          |                                                              |                   |                                 |
| Total comprehensive income(loss)         |                                                              | $(10,846          | )                                    | $(5,378     | )                                    | $(16,224          | )                                    | $17,248 |  | $(6,184 | ) | $11,064 |   |
|                                          |                                                              |                   |                                 |
| **For the three monthsended:**           |                                                              |                   | **June30, 2002**                     |             |                                      | **June 30,2001**  |                                 |
|------------------------------------------|--------------------------------------------------------------|-------------------|--------------------------------------|-------------|--------------------------------------|-------------------|--------------------------------------|
|                                          |            | Before-Tax Amount |        | Tax Expense |        | Net-of-Tax Amount |        | Before-Tax Amount |        | Tax Expense |        | Net-of-Tax Amount |   |
|                                          |                                                              |                   |                                 |
| Foreign currencytranslation adjustments  |                                                              | $(1,163           | )                                    | $-          |                                      | $(1,163           | )                                    | $(57 | ) | $- |  | $(57) |
|                                          |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |
| Unrealized gains (losses)on investments: |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |
| Unrealized holding gains(losses)         |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |
|    arisingduring period   |                                                              | 3                 |                                      | (1          | )                                    | 2                 |                                      | 4 |  | (1 | ) | 3 |   |
|                                          |                                                              |                   |                                 |
| Other comprehensive income(loss)         |                                                              | (1,160            | )                                    | (1          | )                                    | (1,161            | )                                    | (53 | ) | (1 | ) | (54) |
|                                          |                                                              |                   |                                      |             |                                      |                   |                                      |  |  |  |  |  |   |
| Net income(loss)                         |                                                              | 7,741             |                                      | (11,827     | )                                    | (4,086            | )                                    | 34,734 |  | (13,545 | ) | 21,189 |   |
|                                          |                                                              |                   |                                 |
| Total comprehensive income(loss)         |                                                              | $(6,581           | )                                    | $(11,828    | )                                    | $(5,247           | )                                    | $34,681 |  | $(13,546 | ) | $21,135 |   |
|                                          |                                                              |                   |                                 |

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10

7.            **SEGMENT INFORMATION.**Syncor has identified two primary operating segments: U.S.Pharmacy Services and International Operations.  The thirdsegment, which was the U.S. Medical Imaging Business, has beenexcluded from this segment presentation since the operations havebeen discontinued. The international locations and seedsmanufacturing operations that have been discontinued have also beenexcluded from the segment presentation. Segment selection was basedupon internal organizational structures, the process by which theseoperations are managed and evaluated, the availability of separatefinancial results, and materiality considerations. Segment detailis summarized as follows:
|                                                    |                                                                                      | **THREEMONTHS ENDED,**                         |                                                |
|----------------------------------------------------|--------------------------------------------------------------------------------------|------------------------------------------------|------------------------------------------------|
|                                                    |                                                                                      | **June 30,2002**                               |                                                | **June 30,2001** |  |
|                                                    |                                                                                      |                                                |                                                |  |  |
| U.S. Pharmacy ServicesBusiness                     |                |                                                | **       ** |  |  |
|                                                    |                                                                                      |                                                |                                                |  |  |
|      Revenues   |                                                                                      | $178,125                                       |                                                | $137,633 |  |
|      OperatingIncome      |                                                                                      | $  25,090                            |                                                | $  20,722 |  |
|                                          |                                                                                      |                                                |                                                |  |  |
| InternationalOperations                            |                                                                                      |                                                |                                                |  |  |
|                                                    |                                                                                      |                                                |                                                |  |  |
|      Revenues             |                                                                                      | $  11,197                            |                                                | $    6,744 |  |
|      OperatingIncome      |                                                                                      | $       310 |                                                | $      112 |  |
|                                          |                                                                                      |                                                |                                                |  |  |
| UnallocatedCorporate                               |                                                                                      |                                                |                                                |  |  |
|                                                    |                                                                                      |                                                |                                                |  |  |
|      OperatingLoss        |                                                                                      | $ (11,603                                 | )                                              | $  (3,977 | ) |
|                                                      |                                                                                      | **SIXMONTHS ENDED,**                           |                                                |
|------------------------------------------------------|--------------------------------------------------------------------------------------|------------------------------------------------|------------------------------------------------|
|                                                      |                                                                                      | **June 30,2002**                               |                                                | **June 30,2001** |  |
|                                                      |                                                                                      |                                                |                                                |  |  |
| U.S. Pharmacy ServicesBusiness                       |                |                                                | **       ** |  |  |
|                                                      |                                                                                      |                                                |                                                |  |  |
|      Revenues     |                                                                                      | $342,127                                       |                                                | $270,840 |  |
|      OperatingIncome        |                                                                                      | $  49,078                            |                                                | $  40,977 |  |
|                                            |                                                                                      |                                                |                                                |  |  |
| InternationalOperations                              |                                                                                      |                                                |                                                |  |  |
|                                                      |                                                                                      |                                                |                                                |  |  |
|      Revenues               |                                                                                      | $  20,773                            |                                                | $  13,630 |  |
|      Operating Income(Loss) |                                                                                      | $       417 |                                                | $       (9 | ) |
|                                            |                                                                                      |                                                |                                                |  |  |
| UnallocatedCorporate                                 |                                                                                      |                                                |                                                |  |  |
|                                                      |                                                                                      |                                                |                                                |  |  |
|      OperatingLoss          |                                                                                      | $  (17,858                           | )                                              | $  (7,367 | ) |

8.            **NET INCOME PER SHARE. **Basic earnings per share (EPS) amountsare computed by dividing earnings applicable to common stockholdersby the weighted average number of shares outstanding. Diluted EPSamounts assume the issuance of common stock for all potentiallydilutive equivalents outstanding.  Anti-dilutive outstandingstock options of 2,626,699 and 2,272,995 for the three months endedJune 30, 2002 and 2001 and 2,658,616 and 2,262,901 for the sixmonths ended June 30, 2002 and 2001, respectively have beenexcluded from the diluted calculation, respectively.

Thereconciliation of the numerator and denominators of the basic anddiluted earnings per share computations are as follows for thethree and six months ended June 30, 2002 and 2001:

----

11
|                                                                |                                                                                      | **THREEMONTHS ENDED,** |
|----------------------------------------------------------------|--------------------------------------------------------------------------------------|------------------------|
|                                                                |                                                                                      |                        | **June30, 2002** |  |  |  | **June30, 2001** |  |
|                                                      |                | Income (Numerator)     |        | Shares (Denominator) |        | Per Share Amount |        | Income (Numerator) |        | Shares (Denominator) |        | Per Share Amount |
|                                                                |                                                                                      |                        |
|                                                                |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
| Netincome(loss):                                               |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
|                                                                |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
|      ContinuingOperations             |                                                                                      | 8,589                  |  |  |  |  |  | 10,125 |  |  |  |  |
|      DiscontinuedOperations           |                                                                                      | (23,583                | ) |  |  |  |  | 857 |  |  |  |  |
|                                                                |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
| Basic EPS:                                                     |                                                                                      |                        |  | 24,782 |  |  |  | $10,982 |  | 24,766 |  |  |
|                                                                |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
|      ContinuingOperations             |                                                                                      | 8,589                  |  |  |  | $0.36 |  |  |  |  |  | $0.41 |
|      DiscontinuedOperations           |                                                                                      | (23,583                | ) |  |  | ($0.95 | ) |  |  |  |  | $0.03 |
|                                                                |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
| Effect of Dilutive      Stock Options |                                                                                      |                        |  | 2,098 |  |  |  |  |  | 2,170 |  |  |
|                                                                |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
| Diluted EPS:                                                   |                                                                                      |                        |  | 26,880 |  |  |  | $10,982 |  | 26,936 |  |  |
|                                                                |                                                                                      |                        |  |  |  |  |  |  |  |  |  |  |
|      ContinuingOperations             |                                                                                      | 8,589                  |  |  |  | $0.32 |  |  |  |  |  | $0.38 |
|      DiscontinuedOperations           |                                                                                      | (23,583                | ) |  |  | ($0.88 | ) |  |  |  |  | $0.03 |
|                                                                |                                                                                      | **SIXMONTHS ENDED,** |
|----------------------------------------------------------------|--------------------------------------------------------------------------------------|----------------------|
|                                                                |                                                                                      |                      | **June30, 2002** |  |  |  | **June30, 2001** |  |
|                                                      |                | Income (Numerator)   |        | Shares (Denominator) |        | Per Share Amount |        | Income (Numerator) |        | Shares (Denominator) |        | Per Share Amount |
|                                                                |                                                                                      |                      |
|                                                                |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
| Net income(loss):                                              |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
|                                                                |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
|      ContinuingOperations             |                                                                                      | 18,895               |  |  |  |  |  | 19,587 |  |  |  |  |
|      DiscontinuedOperations           |                                                                                      | (22,981              | ) |  |  |  |  | 1,602 |  |  |  |  |
|                                                                |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
| Basic EPS:                                                     |                                                                                      |                      |  | 24,774 |  |  |  |  |  | 24,439 |  |  |
|                                                                |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
|      ContinuingOperations             |                                                                                      | 18,895               |  |  |  | $0.76 |  | 19,587 |  |  |  | $0.80 |
|      DiscontinuedOperations           |                                                                                      | (22,981              | ) |  |  | ($0.93 | ) | 1,602 |  |  |  | $0.07 |
|                                                                |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
| Effect of Dilutive      Stock Options |                                                                                      |                      |  | 2,012 |  |  |  |  |  | 2,569 |  |  |
|                                                                |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
| Diluted EPS:                                                   |                                                                                      |                      |  | 26,786 |  |  |  | $21,189 |  | 27,008 |  |  |
|                                                                |                                                                                      |                      |  |  |  |  |  |  |  |  |  |  |
|      ContinuingOperations             |                                                                                      | 18,895               |  |  |  | $0.71 |  | 19,587 |  |  |  | $0.73 |
|      DiscontinuedOperations           |                                                                                      | (22,981              | ) |  |  | $0.86 |  | 1,602 |  |  |  | $0.06 |

9.            **NOTES RECEIVABLE-RELATED PARTIES.**  We initiated aSenior Management Stock Purchase Plan effective June 16, 1998,pursuant to which our officers and key employees purchased sharesof Syncor stock.  The shares were paid with a five-yearinterest bearing promissory note payable to us.  Interest oneach note is payable on each anniversary date, with the entireoutstanding principal and unpaid interest due on the fifthanniversary date.  As of June 30, 2002 we had eight employeeswith loans outstanding of $3.3 million, as compared to thirteenemployees with $6.2 million outstanding at December 31,2001.

10.          **ACQUISITION OF BUSINESSES.**  During the second quarterof 2002, we acquired a radiopharmacy for a purchase price of $4.0million of which $3.5 million was allocated to goodwill and theremainder to other assets. In addition, we acquired a business,which provides health physics services to clinics and hospitalsthat handle radioactive materials for a purchase price of $0.6million.

During thesecond quarter of 2001, we entered into a management serviceagreement with an oncology clinic in Brazil for an investment of$1.8 million.  In addition, we acquired a distributor andmanufacturer of radiopharmaceuticals in Australia for a purchaseprice of $0.7 million plus the assumption of $0.2 million ofdebt.

----

12

**Item 2.**

****

****
| **                            ** | **SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIES**                                     |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|--|
|                                                                                                                                                                              | **Management's Discussion and Analysis of FinancialCondition and Results of Operations** |  |
|                                                                                                                                                                              | **For theSix Months Ended June 30, 2002 and 2001**                                       |  |

****

****

****

**CRITICAL ACCOUNTINGESTIMATES**

****

Our critical accountingestimates are as follows:

*RevenueRecognition**.***We recognize our revenue primarily from two sources:(i) product revenue, which includes sales from our radiopharmaciesand (ii) services revenue, primarily from our imaging business. Asdescribed below, significant judgments and estimates must be usedby management in connection with the revenue recognized in anyperiod for the imaging business. Material differences may impactthe amount of revenue recorded in any period if managementjudgments or estimates are significantly different thanactual.

We provideimaging services to patients that generally have medical insurancethrough a governmental payor, managed care payor, or a commercialthird-party payor.  Our medical imaging business, (see in note3 above) has several hundred contracts.  These contracts canchange or be amended frequently due to changes in the payors’or governmental agencies’ reimbursement.  Additionally,as we acquired medical imaging centers, new contracts had to beentered into our computer systems. Until these contracts havebeen updated in our systems, we need to make estimates about theanticipated contracted amounts that we would ultimately receivefrom all of our various payors.  This requires us to recordestimates when recording imaging revenues based upon historicaldata and trends.   These estimates are continuallyevaluated and compared to actual reimbursements from the variouspayors to ensure that we have properly recorded revenues andappropriately adjusted for shifts in our payor mix. Accordingly, these recorded revenues are based on currentinformation available, but subject to estimation, which may lead toadjustments in future periods as actual reimbursement rates aredetermined.  Adjustments were made in these estimates in thesecond quarter of 2002 for contractual reimbursement rates of $2.4million.

*Estimating Valuation Allowances for DoubtfulAccounts.*The preparation of financial statements requires ourmanagement to make estimates and assumptions on the collectibilityof our accounts receivable. Management specifically analyzeshistorical bad debts, customer concentrations, customercredit-worthiness, current economic trends, aging of accounts andchanges in payment terms when evaluating the adequacy of theallowance for doubtful accounts. Any changes in these estimates orassumptions could cause material differences in recordedallowances. During the second quarter of 2002 we increased our baddebt reserves for the imaging business in an amount of $7.0 millionto better reflect our current estimates ofcollectibility.

*Valuation of Long-LivedAssets and Goodwill**.***  Weassess the impairment of identifiable intangibles, long-livedassets and related goodwill and enterprise level goodwill wheneverevents or changes in circumstances indicate that the carrying valuemay not be recoverable. Factors we consider important which couldtrigger an impairment review include the following:
|           | •     | significantunderperformance relative to expected historical or projectedfuture operating results;           |
|--------------------------------------------------------|--------------------------------|-------------------------------------------------------------------------------------------------------------|
|                                                   | •     | significant changes in themanner of our use of the acquired assets or the strategy for ouroverall business; |
|                                                   | •     | significant negativeindustry or economic trends; and                                                        |
|                                                   | •     | our market capitalizationrelative to net book value.                                                        |
|                                                        |                                |                                                                                                             |

**NETSALES**

Net salesincreased 31.1%, or $44.9 million, to $189.3 million for the threemonths ended June 30, 2002 and increased 27.6%, or $78.4 million,to $362.9 million for the six months ended June 30, 2002. Both ofour business segments had sales growth during the quarter. U.S. Pharmacy Services revenue increase was primarily due to samestore radiopharmacy growth.  The sales growth forInternational operations was primarily from acquisitions and growthin our Taiwan businesses. 

----

13
|                                |                                                                                                              | **                Revenues Three Months Ended June 30, ** |
|--------------------------------|--------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |                    | **2002**                                                                                                                                       | **2001** |   |
|                                |                                                                                                         |
| U.S.Pharmacy Services Business |                                                                                                              | $178,125                                                                                                                                       | $137,633 |   |
| International Operations       |                                                                                                              | 11,197                                                                                                                                         | 6,744 |   |
|                                |                                                                                                         |
| Total                          |                                                                                                              | $189,322                                                                                                                                       | $144,377 |   |
|                                |                                                                                                         |

******

******
|                                |                                                                                                                                      | **             Revenues Six Months Ended June 30, ** |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
|                                |                        | **2002**                                                                                                                   | **2001** |   |
|                                |                                                                                                                                 |
| U.S.Pharmacy Services Business |                                                                                                                                      | $342,127                                                                                                                   | $270,840 |   |
| International Operations       |                                                                                                                                      | 20,773                                                                                                                     | 13,630 |   |
|                                |                                                                                                                                 |
| Total                          |                                                                                                                                      | $362,900                                                                                                                   | $284,470 |   |
|                                |                                                                                                                                 |

******

***U.S.Pharmacy Business***

Net sales increased 29.4%, or $40.5 million, to$178.1 million for the three months ended June 30, 2002 and by26.3%, or $71.3 million to $342.1 million for the six months endedJune 30, 2002. This increase was driven primarily by increasedsales of cardiology imaging agents.  For the three monthsended June 30, 2002 sales related to cardiology imaging agentsincreased 16.3%, or $16.0 million, and by 14.3%, or $27.7 millionfor the six months ended June 30, 2002 both as a result of priceand volume increases.  This business also had oncology salesincreases of 50.8%, or $8.2 million for the three months ended June30, 2002, and 38.8%, or $12.1 million for the six months ended June30, 2002.  Acquisitions made during 2001 accounted for theremainder of the increase for this business during 2002.

***International Operations***

Net sales increased 66.0%, or $4.5 million, to$11.2 million for the three months ended June 30, 2002 and by52.4%, or $7.1 million to $20.8 million for the six months endedJune 30, 2002. Acquisitions accounted for the majority of the salesincrease.  Net sales at our existing centers or facilitieswere slightly higher during the quarter and year to date primarilyas a result of higher pharmacy sales in certain countries. The Taiwan market did have higher same store sales, which increased6% both for the quarter and year to date.

**GROSSPROFIT**

Gross profit increased 37.5%, or $16.5 million,to $60.6 million for the three months ended June 30, 2002 and by34.0%, or $29.3 million to $115.6 million for the six months endedJune 30, 2002.  Our consolidated gross profit margin as apercentage of sales improved to 32.0% for the three months endedJune 30, 2002 as compared to 30.5% for the same period in 2001 andincreased to 31.9% for the six months ended June 30, 2002 ascompared to 30.3% for the same period in 2001. The increase for thequarter and year to date was driven by continued improvement inproduct mix, price increases, and operating efficiencies in ourradiopharmacy network and increased margins from new businesses inthe Pharmacy Services Business.

----

14
|                                |                                                                                                                    | **               Gross Profit Three Months Ended June 30, ** |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                |                     | **2002**                                                                                                                                     | **2001** |   |
|                                |                                                                                                               |
| U.S.Pharmacy Services Business |                                                                                                                    | $56,238                                                                                                                                      | $41,240 |   |
| International Operations       |                                                                                                                    | 4,269                                                                                                                                        | 2,817 |   |
|                                |                                                                                                               |
| Total                          |                                                                                                                    | $60,594                                                                                                                                      | $44,057 |   |
|                                |                                                                                                               |
|                                |                                                                                                                    | **              Gross Profit Six Months Ended June 30, ** |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                |                     | **2002**                                                                                                                             | **2001** |   |
|                                |                                                                                                               |
| U.S.Pharmacy Services Business |                                                                                                                    | $107,791                                                                                                                             | $80,692 |   |
| International Operations       |                                                                                                                    | 7,807                                                                                                                                | 5,584 |   |
|                                |                                                                                                               |
| Total                          |                                                                                                                    | $115,598                                                                                                                             | $86,276 |   |
|                                |                                                                                                               |

***U.S.Pharmacy Business***

Gross profit increased 36.6%, or $15.1 million,to $56.3 million for the three months ended June 30, 2002 andincreased 33.6%, or $27.1 million, to $107.8 million for the sixmonths ended June 30, 2002. Gross profit margin as a percentage ofsales improved to 31.6% for the three months ended June 30, 2002 ascompared to 30.0% for the same period in 2001 and improved to 31.5%for the six months ended June 30, 2002 as compared to 29.8% for thesame period in 2001. This gross profit margin increase for thequarter and year to date was due primarily to improved marginsassociated with new businesses, such as the production anddistribution of FDG (fluorodeoxyglucose), and higher marginsassociated with recent acquisitions.  These initiativesaccounted for .9% of the overall margin increase on a year to datebasis.  The remainder of the gross profit margin increase wasthe result of continued leveraging of our radiopharmacy network; wecontinue to successfully increase volumes without comparableincreases in material, labor and delivery costs.

***International Operations***

Gross profit increased 51.5%, or $1.5 million, to$4.3 million for the three months ended June 30, 2002 and increased39.8%, or $2.2 million, to $7.8 million for the six months endedJune 30, 2002.  Our gross profit margin as a percentage ofsales decreased to 38.1% for the three months ended June 30, 2002compared to 41.8% for the same period in 2001 and decreased to37.6% for the six months ended June 30, 2002 as compared to 41.0%for the same period in 2001. Margin growth at our existingradiopharmacy sites decreased in the quarter and year to date in2002, which was offset by improving margins at imaging sites. Ourmargins were also reduced by acquired businesses, which have alower margin than our existing businesses. 

**OPERATING, SELLING ANDADMINISTRATIVE EXPENSES**

Operating, selling and administrative expensesincreased 78.1%, or $18.4 million, to $42.0 million for the threemonths ended June 30, 2002 and increased by 64.0%, or $29.0 millionto $74.4 for the six months ended June 30, 2002.  The ratio ofthese expenses to net sales for the quarter was 22.2% compared to16.3% for the same period in 2001. For the six months endedJune 30, 2002 the ratio was 20.5% compared to 15.9% for thecomparable period in 2001. Acquisitions in the RadiopharmacyBusiness caused the majority of the increase.  In addition, weincurred higher Corporate costs primarily from increased IT costsassociated with new systems and increased telecommunicationsexpenses. The unallocated corporate expenses include $5.0 millionin costs associated with certain severance agreements and costsassociated with the proposed merger agreement with Cardinal HealthInc. Also included in these unallocated corporate expenses arecertain incentive bonuses, which have increased in 2002 as comparedto the prior year period.

----

15
|                                |                                                                                                                    | **Operating, Selling andAdministrative Expenses** |     |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|----------|
|                                |                                                                                                                    | **Three Months Ended June 30, **             |
|                                |                     | **2002**                                          | **2001** |   |
|                                |                                                                                                               |
| U.S.Pharmacy Services Business |                                                                                                                    | $28,931                                           | $18,907  |   |
| International Operations       |                                                                                                                    | 3,213                                             | 2,103    |   |
| UnallocatedCorporate           |                                                                                                                    | 9,864                                             | 2,574    |   |
|                                |                                                                                                               |
| Total                          |                                                                                                                    | $42,008                                           | $23,584  |   |
|                                |                                                                                                               |

******
|                                |                                                                                                                    | **Operating, Selling andAdministrative Expenses** |     |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|----------|
|                                |                                                                                                                    | **Six Months Ended June 30, **               |
|                                |                     | **2002**                                          | **2001** |   |
|                                |                                                                                                               |
| U.S.Pharmacy Services Business |                                                                                                                    | $54,153                                           | $36,579  |   |
| International Operations       |                                                                                                                    | 5,830                                             | 4,114    |   |
| UnallocatedCorporate           |                                                                                                                    | 14,376                                            | 4,659    |   |
|                                |                                                                                                               |
| Total                          |                                                                                                                    | $74,359                                           | $45,352  |   |
|                                |                                                                                                               |

******

***U.S.Pharmacy Business***

Operating, selling and administrative costsincreased 53.0%, or $10.0 million, to $28.9 million for the threemonths ended June 30, 2002 and increased 48.0%, or $17.6 million,to $54.2 million for the six months ended June 30, 2002.  Thequarter and year to date increase was due primarily to increasedcosts associated with acquired businesses, which accounted for $4.0million of this increase for the three months and $7.4 million forthe six months ended June 30, 2002. Costs associated with openingnew FDG production facilities (cyclotrons), used in the productionof FDG, accounted for an additional $0.9 million for the threemonths and $2.3 million for the six months ended June 30,2002.  The remainder of the increase is the result ofincreased costs in our radiopharmacy network, due to increasedvolumes and growth.  As a percentage of sales, operating,selling and administrative expenses increased from 13.5% in 2001 to15.8% in 2002 for the six months ended June 30,2002. 

***International Business***

Operating, selling andadministrative expenses increased 52.8%, or $1.1 million, to $3.2million for the three months ended June 30, 2002 and increased41.7%, or $1.7 million, to $5.8 million for the six months endedJune 30, 2002. These expenses increased primarily as a result ofnew businesses and start-up centers. As a percentage of sales,these expenses decreased from 30.2% in 2001 to 28.1% in2002. 

****

****

**DEPRECIATION ANDAMORTIZATION**

Depreciation and amortization increased 32.4%, or$1.2 million, to $4.8 million for the three months ended June 30,2002 and increased 31.1%, or $2.3 million, to $9.6 million for thesix months ended June 30, 2002. The majority of the increase bothfor the quarter and year to date was attributable to our pharmacyservices business, primarily in new FDG production facilities andnew businesses, with an increase of $0.7 million for six monthsended June 30, 2002 and $1.5 million for the six months ended June30, 2002. Depreciation also increased for our corporate operations,primarily for new IT systems costs with an increase of $0.3 millionfor the three months ended June 30, 2002 and $0.7 million for thesix months ended June 30, 2002. The prior year expenses includedgoodwill amortization of $1.5 million for the three months endedJune 30, 2002 and $3.1 million for the six months ended June 30,2002.

----

16
|                                |                                                                                                                          | **Depreciation and Amortization**     |     |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------|----------|
|                                |                                                                                                                          | **Three Months Ended June 30, ** |
|                                |                      | **2002**                              | **2001** |   |
|                                |                                                                                                                     |
| U.S.Pharmacy Services Business |                                                                                                                          | $2,391                                | $1,658   |   |
| International Operations       |                                                                                                                          | 746                                   | 602      |   |
| UnallocatedCorporate           |                                                                                                                          | 1,652                                 | 1,356    |   |
|                                |                                                                                                                     |
| Total                          |                                                                                                                          | $4,789                                | $3,616   |   |
|                                |                                                                                                                     |

****
|                                |                                                                                                                          | **Depreciation and Amortization**   |                                      |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------|-------------------------------------------|
|                                |                                                                                                                          | **Six Months Ended June 30, ** |
|                                |                      | **2002**                            | **2001**                                  |   |
|                                |                                                                                                                     |
| U.S.Pharmacy Services Business |                                                                                                                          | $4,670                              | $3,190                                    |   |
| International Operations       |                                                                                                                          | 1,560                               |       1,479 |   |
| UnallocatedCorporate           |                                                                                                                          | 3,372                               | 2,654                                     |   |
|                                |                                                                                                                     |
| Total                          |                                                                                                                          | $9,602                              | $7,323                                    |   |
|                                |                                                                                                                     |

****

**ACQUISITION OFBUSINESSES**

****

During the second quarterof 2002, we acquired a radiopharmacy for a purchase price of $4.0million of which $3.5 million was allocated to goodwill and theremainder to other assets. In addition, we acquired a business,which provides health physics services to clinics and hospitalsthat handle radioactive materials for a purchase price of $0.6million.

During thesecond quarter of 2001, we entered a management service agreementwith an oncology clinic in Brazil for an investment of $1.8million.  In addition, we acquired a distributor andmanufacturer of radiopharmaceuticals in Australia for a purchaseprice of $0.7 million plus the assumption of $0.2 million ofdebt.

**LIQUIDITY AND CAPITALRESOURCES**

We had cash,cash equivalents and investments of $18.1 million at June 30, 2002compared to $29.5 million at December 31, 2001. Total debt was$207.5 million at June 30, 2002 compared to $226.7 million atDecember 31, 2001, a reduction of $19.2 million. We had a positivecash flow from operations of $45.5 million during the first sixmonths of 2002.  We used a portion of this cash flow to paydown debt balances. Working capital decreased to $75.1 million from$115.7 million at December 31, 2001 primarily due to increasedaccruals for severance related charges in continuing anddiscontinued operations and asset write downs for anticipatedlosses on the sale of discontinued operations.

On January17, 2002, we completed an asset securitization agreement using thetrade receivables as collateral. At June 30, 2002, we had $64.3million extended on this $65 million agreement. In addition, we hadborrowings of $88.0 million outstanding on our $167.5 millioncredit line. Based upon our current acquisition and capital planswe believe we have sufficient resources available to fund our 2002capital needs.

As furtherdescribed in note 4, if the merger agreement is terminated, wecould be required to pay Cardinal Health termination fees rangingfrom $4.0 million to $24.1 million.  If this obligationbecomes payable, we expect to pay such amounts using our borrowingcapacity under our existing credit agreements.

----

17

**FORWARD LOOKINGSTATEMENT**

Except forthe historical information and discussions contained herein,statements contained in this Report on Form 10-Q may constitute"forward looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995.  These statementsinvolve a number of risks, uncertainties and other factors thatcould cause actual results to differ materially, including: ourpending acquisition by Cardinal Health; changes in the regulationof the healthcare industry at either or both of the federal andstate levels; changes or delays in reimbursement for our servicesby governmental or private payers; our failure to continue todevelop and market new products and services and to keep pace withtechnological change; competitive pressures; failure to obtain orprotect intellectual property rights; quarterly fluctuations inrevenues and volatility of our stock price; our ability to attractand retain key personnel; currency risks; dependence on certainsuppliers; our ability to successfully manage acquisitions andalliances; legal, political and economic changes; and other risks,uncertainties and factors discussed  in the "Risk Factors"section in the Annual Report on Form 10-K for December 31, 2001 andelsewhere herein, in our other filings with the SEC or in materialsincorporated by reference.  Given these uncertainties, unduereliance should not be placed on such forward-lookingstatements.

****

****

**Item 3.**

****

**QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISKS**

Interestincome earned on our investment portfolio is affected by changes inthe general level of U.S. interest rates. Our line of creditborrowings effectively bear interest at variable rates andtherefore, changes in U.S. interest rates affect interest expenseincurred thereon. Changes in interest rates do not affect interestexpense incurred on our fixed rate debt. There have been nosignificant changes in the debt instruments from the table as filedin the annual report on Form 10-K at December 31, 2001.

----

18

****

**SYNCORINTERNATIONAL CORPORATION AND SUBSIDIARIES**

PART II.  OTHERINFORMATION

ITEM 4.  SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

On June 17, 2002, theCompany held its annual meeting of stockholders.  Threeproposals were presented to the stockholders for theirapproval.  The following summarizes the proposals and theresults of the voting:
| 1.                      | Election ofDirectors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                 |
|          | The first proposal was toelect Monty Fu, Dr. Henry N. Wagner, Jr., and Ronald A. Williams asdirectors for additional three-year terms.  The stockholdersvoted to re-elect the three directors:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|          |                                                                  | FOR                    | WITHHOLD  |
|--------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|-----------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                       |           |
|          | MontyFu                                                                                                                                          | 17,705,763                                                               | 4,024,255 |
|          | Dr. Henry N. Wagner,Jr.                                                                                                                                                                                                                                                       | 17,709,217                                                               | 4,029,801 |
|          | Ronald A.Williams                                                                                                                                                                                                                | 17,701,951                                                               | 4,028,067 |
| 2.                      | Selection of IndependentAuditors                                                                                                                                              |
|--------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                               |
|          | The second proposal was toratify the selection of KPMG LLP as the Company’s independentauditors for the 2002 fiscal year.  The stockholders ratifiedthe selection: |
|                                                                              | FOR                     | AGAINST   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                                              | 20,010,594                                                                     | 1,719,424 |
| 3.      | The third proposal was toapprove the Employee Stock Purchase Plan.  The stockholdersapproved the Plan: |
|----------------------------------|-------------------------------------------------------------------------------------------------------------|
|                                                                              | FOR                    | AGAINST   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|-----------|
|                                                                              | 19,657,794                                                               | 2,072,224 |

ITEM 6.  EXHIBITS ANDREPORTS ON FORM 8-K
| (a)                           | Exhibits                          |
|--------------------------------------------------------|-----------------------------------|
|           |                                   |  |
|                                                        | 10.      | MaterialContracts |
|           |                                   |  |
|                                                        |                                   | 10.1      | Syncor InternationalCorporation Corporate Officers Incentive Plan for 2002 |
|           |                                   |  |  |
|                                                        |                                   | 10.2      | Amendment to StockIncentive Plans of Syncor International Corporation, effective asof March 22, 2002 |

----

19
|                                                        |                                                             | 10.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Agreement and Plan ofMerger, dated June 14, 2002, by and among Cardinal Health, Inc.,Mudhen Merger Corp., and the Company, filed as Exhibit 2.1 to theForm 8-K filed June 21, 2002, and incorporated herein byreference.                           |   |
|--------------------------------------------------------|-------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                        |                                                             | 10.4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | First Amendment to RightsAgreement, dated as of June 14, 2002, between the Company andAmerican Stock Transfer & Trust Company as Rights Agent, filedas Exhibit 2.2 to the Form 8-A/A filed June 19, 2002, andincorporated herein by reference. |
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                        |                                                             | 10.5                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Syncor InternationalCorporation Employee Stock Purchase Plan, effective January 1,2003, filed as Appendix I to the Proxy Statement filed April 29,2002 and incorporated herein by reference.                                                       |
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                        | 11.                           | Statement re: Computation of Per Share Earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                        |                                                             | Computation can be clearlydetermined from the material contained in Part I of this Form10-Q.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                        | 99.                           | AdditionalExhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                    |
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                        |                                                             | 99.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Certification of CEO andCFO Regarding Quarterly Report on Form 10-Q.                                                                                                                                                                               |
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (b)                           | Reports on Form 8-K filedin the Quarter Ended June 30, 2002 |
|           |                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                        |                                                             | Form 8-K, filed on June21, 2002 (Items 5 and 7), disclosing the Company’s enteringinto an Agreement and Plan of Merger, dated June 14, 2002, by andamong the Company, Cardinal Health, Inc., and Mudhen Merger Corp.,the Support/Voting Agreements entered into between Cardinal Healthand Monty Fu and Robert G. Funari, the text of a joint pressrelease issued by the Company and Cardinal Health regarding theAgreement and Plan of Merger, and the text of a press release bythe Company announcing its intention to sell its ComprehensiveMedical Imaging division and that it intended to take a chargerelating to certain imaging assets, the reorganization of itsinternational operations and other operating charges. |

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20

****

**SIGNATURE**

****

****

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registranthas duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.
|                                                                                                                                                                                                                                                                                                                                                                                                                | **Syncor InternationalCorporation**                                                                                                                                                                                                                                                                   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                |                     (Registrant)                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                             |
| August 14,2002                                                                 | By:  /s/ WilliamP.Forster                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                |        WilliamP. Forster                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                |        SeniorVice President and Chief Financial Officer                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                |        (PrincipalFinancial/Accounting Officer)                                                                                                                                                                                                                     |

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21

Exhibit10.1

**CORPORATE OFFICERS INCENTIVE PLAN**

**OVERVIEW FOR JACKCOFFEY, SHEILA COOP AND LEWIS TERRY**The Corporate Officers Incentive Plan is designed to supportorganizational achievements and focus performance towards overallSyncor Earnings Per Share and Return on Invested Capital as well asachievements in your area of responsibilities through the use ofIndividual Incentive Plan Objectives (IIPO's).**Plan Triggers**A trigger is a goal that must be met to activate a payout under theplan. The triggers for this plan are:
|       * |       | Syncor Earnings per Share(EPS)   |
|---------------------------------------|--------------------------------|----------------------------------|
|       * |       | Return on Invested Capital(ROIC) |

**Target Incentive**Your incentive target opportunity through the 2002 CorporateOfficer Incentive Plan is:
|       * |       | 50% |
|---------------------------------------|--------------------------------|-----|
| **Incentive PlanComponents**                                                                                                                                                                                                                    |     Component           |    Weighting                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|-----------------------------------------------------------------|
| The target incentive isdivided into two components.  Each plan component is weightedas a percentage of your overall incentive opportunity.  Thecomponents and weighting factors for the Corporate Officer Plan areshown to the right: |    Financials                     |      70%      |
|      IIPO                                                                                                                                                                                     |      30%      |

****

**70% of the financialcomponent is based on EPS and 30% is based on ROIC.Individual Performance Thresholds**Each incentive plan component has a minimum performance thresholdthat must be met before a payout is made for that component:
|       * |       | 100% minimum achievementon financial goals |
|---------------------------------------|--------------------------------|--------------------------------------------|
|       * |       | 80% minimum achievement ofIIPO's           |

**Overachievement**This plan includes overachievement opportunity for IIPOs. If youexceed your goals, you are eligible to receive an incentive payoutbased on the percentage of overachievement.
|       * |       | For example, if youoverachieve on the IIPO component by 10%, you will receive anadditional 10% for that component.                                                        |
|---------------------------------------|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       * |       | You can receive additionalpayouts up to a maximum of 150% of the IIPO component.  **There is no overachievement opportunity for the financialportion of the plan.*** |

**Calculation of Incentive Payment**The calculations **assume all triggers have been met**.Each component is **calculated independently** to determine thetotal incentive payout.

----

22

Below is a sample calculation for a Corporate Officer with a basesalary of $200,000 and an incentive target of 50% ($100,000). He orshe achieves 100% of their financial goals and 110% on theirIIPO's.

**Target Opportunity x Component Weighting x Performance = TotalPayout***(overachievement on IIPO's only)
|     Component                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |         Target         |      Weighting                                                            |    Performance                                                         |         Payout         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
|       Financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        $70,000                   |           70%           |         100%         |                $70,000      |
|           IIPO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        $30,000                   |           30%           |         110%         |                $33,000      |
| TotalPayout                                                                                                       |              $103,000                 |

**OVERVIEW FOR WILLIAMFORSTER**The Corporate Officers Incentive Plan is designed tosupport organizational achievements and focus performance towardsoverall Syncor Earnings Per Share and Return on Invested Capital aswell as achievements in your area of responsibilities through theuse of Individual Incentive Plan Objectives (IIPO's).**Plan Triggers**A trigger is a goal that must be met to activate a payout underthe plan. The triggers for this plan are:
|       * |       | Syncor Earnings per Share(EPS)   |
|---------------------------------------|--------------------------------|----------------------------------|
|       * |       | Return on Invested Capital(ROIC) |

**Target Incentive**Your incentive target opportunity through the 2002 CorporateOfficer Incentive Plan is:
|       * |       | 75% |
|---------------------------------------|--------------------------------|-----|
| **Incentive PlanComponents**                                                                                                                                                                                                        |     Components                                              |     Weighting                                                    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
| The target incentive isdivided into two components. Each plan component is weighted as apercentage of your overall incentive opportunity. The componentsand weighting factors for the Corporate Officer Plan are shown tothe right: |       Financials                        |         70%         |
|           IIPO                                                                                                                  |         30%         |

**70% of the financial component is based on EPS and 30% is basedon ROIC.**

----

23****

**Individual Performance Thresholds**Each incentive plan component has a minimum performance thresholdthat must be met before a payout is made for that component:
|       * |       | 100% minimum achievementon financial goals |
|---------------------------------------|--------------------------------|--------------------------------------------|
|       * |       | 80% minimum achievement ofIIPO's           |

**Overachievement**This plan includes overachievement opportunity forIIPOs. If you exceed your goals, you are eligible to receive anincentive payout based on the percentage of overachievement.
|       * |       | For example, if youoverachieve on the IIPO component by 10%, you will receive anadditional 10% for that component.                                                        |
|---------------------------------------|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       * |       | You can receive additionalpayouts up to a maximum of 150% of the IIPO component. ** There is no overachievement opportunity for the financial portionof the plan.*** |

**Calculation of Incentive Payment**The calculations **assume all triggers have been met**.Each component is **calculated independently** to determine thetotal incentive payout.Below is a sample calculation for a Corporate Officer with a basesalary of $200,000 and an incentive target of 50% ($100,000). He orshe achieves 100% of their financial goals and 110% on theirIIPO's.

**Target Opportunity x Component Weighting x Performance = TotalPayout***(overachievement on IIPO's only)
|     Component                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |         Target         |      Weighting                                                            |    Performance                                                                     |         Payout         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
|       Financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        $70,000                   |           70%           |          100%          |                $70,000      |
|          IIPO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        $30,000                   |           30%           |          110%          |                $33,000      |
| TotalPayout                                                                                                        |              $103,000                 |

**OVERVIEW FOR MONTYFU**The Corporate Officers Incentive Plan is designed to supportorganizational achievements and focus performance towards overallSyncor Earnings Per Share and Return on Invested Capital as well asachievements in your area of responsibilities through the use ofIndividual Incentive Plan Objectives (IIPO's).

----

24

**PlanTriggers**A trigger is a goal that must be met to activate a payout under theplan. The triggers for this plan are:
|       * |       | Syncor Earnings per Share(EPS)   |
|---------------------------------------|--------------------------------|----------------------------------|
|       * |       | Return on Invested Capital(ROIC) |

**Target Incentive**Your incentive target opportunity through the 2002 CorporateOfficer Incentive Plan is:
|       * |       | 70% |
|---------------------------------------|--------------------------------|-----|
| **Incentive PlanComponents                                     ** |   Component                                                         |   Weighting                                                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|
| The target incentive isdivided into two components. Each plan component is weighted as apercentage of your overall incentive opportunity. The componentsand weighting factors for the Corporate Officer Plan are shown tothe right:                        |     Financial                                   |        80%        |
|        IIPO                                                                                                                                                                          |        20%        |

**70% of the financial component is based on EPS and 30% is basedon ROIC.****Individual Performance Thresholds**Each incentive plan component has a minimum performancethreshold that must be met before a payout is made for thatcomponent:
|       * |       | 100% minimum achievementon financial goals |
|---------------------------------------|--------------------------------|--------------------------------------------|
|       * |       | 80% minimum achievement ofIIPO's           |

**Overachievement**This plan includes overachievement opportunity for IIPOs. Ifyou exceed your goals, you are eligible to receive an incentivepayout based on the percentage of overachievement.
|       * |       | For example, if youoverachieve on the IIPO component by 10%, you will receive anadditional 10% for that component.                                                        |
|---------------------------------------|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       * |       | You can receive additionalpayouts up to a maximum of 150% of the IIPO component.  **There is no overachievement opportunity for the financialportion of the plan.*** |

**Calculation of Incentive Payment**The calculations **assume all triggers have been met.**Each component is **calculated independently** to determinethe Total Incentive Payout.Below is a sample calculation for a Corporate Officer with a basesalary of $340,000 and an incentive target of 70% ($238,000). He orshe achieves 100% of their financial goals and 110% of theirIIPO's.

----

25**Target Opportunity x Component Weighting x Performance = TotalPayout***(overachievement on IIPO's only)
|     Component                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          Target         |      Weighting                                                            |    Performance                                                                     |         Payout         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
|       Financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |       $190,400                                   |           80%           |          100%          |              $190,400                 |
|           IIPO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |        $47,600                         |           20%           |          110%          |                $52,360      |
| TotalPayout                                                                                                        |              $242,760                       |

**OVERVIEW FOR ROBERTFUNARI**The Corporate Officers Incentive Plan is designed to supportorganizational achievements and focus performance towards overallSyncor Earnings Per Share and Return on Invested Capital as well asachievements in your area of responsibilities through the use ofIndividual Incentive Plan Objectives (IIPO's).**Plan Triggers**A trigger is a goal that must be met to activate a payout under theplan. The triggers for this plan are:
|       * |       | Syncor Earnings per Share(EPS)   |
|---------------------------------------|--------------------------------|----------------------------------|
|       * |       | Return on Invested Capital(ROIC) |

**Target Incentive**Your incentive target opportunity through the 2002 CorporateOfficer Incentive Plan is:
|       * |       | 85% |
|---------------------------------------|--------------------------------|-----|
| **Incentive PlanComponents**                                                                                                                                                                                                        |   Component                                 |  Weighting                                            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|-----------------------------------------------------------------|
| The target incentive isdivided into two components. Each plan component is weighted as apercentage of your overall incentive opportunity. The componentsand weighting factors for the Corporate Officer Plan are shown tothe right: |     Financial           |      80%      |
|         IIPO                                                                                                                                             |      20%      |

**70% of the financial component is based on EPS and 30% is basedon ROIC.****Individual Performance Thresholds**Each incentive plan component has a minimum performance thresholdthat must be met before a payout is made for that component:
|       * |       | 100% minimum achievementon financial goals |
|---------------------------------------|--------------------------------|--------------------------------------------|
|       * |       | 80% minimum achievement ofIIPO's           |

----

26

**Overachievement**This plan includes overachievement opportunity for IIPOs. If youexceed your goals, you are eligible to receive an incentive payoutbased on the percentage of overachievement.
|       *       |       | For example, if youoverachieve on the IIPO component by 10%, you will receive anadditional 10% for that component.                                                        |
|---------------------------------------------|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        * |       | You can receive additionalpayouts up to a maximum of 150% of the IIPO component.  **There is no overachievement opportunity for the financialportion of the plan.*** |

**Calculation of Incentive Payment**The calculations **assume all triggers have beenmet**.Each component is **calculated independently** to determine theTotal Incentive Payout.Below is a sample calculation for a Corporate Officer with a basesalary of $340,000 and an incentive target of 70% ($238,000). He orshe achieves 100% of their financial goals and 110% of theirIIPO's.**Target opportunity x Component Weighting x Performance = TotalPayout***(overachievement on IIPO's only)
|     Component                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |         Target         |      Weighting                                                            |    Performance                                                                     |         Payout         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
|       Financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |       $190,400                             |           80%           |          100%          |              $190,400                 |
|          IIPO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        $47,600                   |           20%           |          110%          |                $52,360      |
| TotalPayout                                                                                                        |              $242,760                 |

**OVERVIEW FOR RODNEYBOONE**The Corporate Officers Incentive Plan is designed to supportorganizational achievements and focus performance towards overallSyncor Earnings Per Share and Return on Invested Capital as well asachievements in your area of responsibilities through the use ofIndividual Incentive Plan Objectives (IIPO's).**Plan Triggers**A trigger is a goal that must be met to activate a payout under theplan. The triggers for this plan are:
|       * |       | Syncor Earnings per Share(EPS)   |
|---------------------------------------|--------------------------------|----------------------------------|
|       * |       | Return on Invested Capital(ROIC) |

----

27**Target incentive**Your incentive target opportunity through the 2002 CorporateOfficer Incentive Plan is:
|       * |       | 75% |
|---------------------------------------|--------------------------------|-----|
| **Incentive PlanComponents**                                                                                                                                                                                                        |   Component                                                         |   Weighting                                                         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|
| The target incentive isdivided into two components. Each plan component is weighted as apercentage of your overall incentive opportunity. The componentsand weighting factors for the Corporate Officer Plan are shown tothe right: |    Financial                                              |        80%        |
|        IIPO                                                                                                                                                   |        20%        |

**70% of the financial component is based on EPS and 30% is basedon ROIC.****Individual Performance Thresholds**Each incentive plan component has a minimum performance thresholdthat must be met before a payout is made for that component:
|       * |       | 100% minimum achievementon financial goals |
|---------------------------------------|--------------------------------|--------------------------------------------|
|       * |       | 80% minimum achievement ofIIPO's           |

**Overachievement**This plan includes overachievement opportunity.
|       * |       | If you exceed your IIPOgoals you are eligible to receive an additional incentive payoutbased on the level of overachievement (up to a maximum of 150% ofthe target for the component). For example, if you overachieve onyour goals by 10% you will receive an additional 10% of your targetincentive for the IIPO component. |
|---------------------------------------|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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28
|       *    |       | In addition, DivisionPresidents have an opportunity to receive overachievement based ontheir financial results. To be eligible for the overachievement,you must overachieve on the financial results for your area ofresponsibility. A pool is created with thirty percent of earningsgenerated over the EPS target. This pool will be distributed to theDivision President proportionate to their division financialoverachievement to plan up to 200% of their incentive target. Inthe example shown the pool is $200,000. |  | LineOfficer One | LineOfficer Two |
|------------------------------------------|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|-----------------|-----------------|
|  Target Incentive Level        | 75%                            | 75%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|  Overachievement Level         | 10%                            | 20%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|  Proportionate Pool Allocation | 33%                            | 67%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|  Overachievement Dollars       | $66,000                        | $134,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

**Calculation ofIncentive Payment**The calculations **assume all triggers have beenmet**. Each component is **calculated independently**.Below is a sample calculation for an Officer with a base salary of$280,000 and an incentive target of 75% ($210,000).**Target Opportunity x Component Weighting x Performance = TotalPayout**
|         Component                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       Target                                                                                                                                                                                                                                                                                                                                                                                                             | Weighting                                                                                                       |     Performance                                                                |       Payout       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|
|           Financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |     $168,000                                                                                                                                                                                                                                                                                                                                                                                                                                 |          80%          |           110%          |          $168,000                 |
| Overachievement Pool                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                |            $66,000                                       |
|                IIPO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      $42,000                                                                                                                                                                                                                                                                                                                                                                                                                       |          20%          |          110%           |            $46,200      |
| TotalPayout                                                                                                           |          $280,200                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

29

Exhibit10.2

**AMENDMENTTO STOCK INCENTIVE PLANSOF SYNCOR INTERNATIONAL CORPORATION**

           This AMENDMENT TO STOCK INCENTIVE PLANS OF SYNCOR INTERNATIONALCORPORATION (this "Amendment") is made as of March 22, 2002, andamends the stock incentive plans described below of SyncorInternational Corporation, a Delaware corporation (the"Company").

           WHEREAS, on March 22, 2002, the Board of Directors of the Companypassed resolutions to amend various stock incentive plans of theCompany to extend the period during which a stock option can beexercised upon an optionee's retirement, disability ordeath;

           NOW THEREFORE, the stock incentive plans of the Company listedbelow are hereby amended as follows:
| 1.               | This Amendment affects thefollowing stock incentive plans (collectively, the "Plans"): the 1990 Master Stock Incentive Plan (the "1990 Plan"), the 2000Master Stock Incentive Plan (the "2000 Plan"), the UniversalPerformance Equity Participation Plan (the "Universal Plan"), andthe New Employee Stock Option Plan (the "New EmployeePlan").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 2.               | The definition of"Retirement" under the Plans is hereby deleted in its entirety, andin replacement thereof shall be the followingdefinition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | "Retirement" shall meanvoluntary retirement from employment with the Company at age 55with at least 10 years of service, or at age 62." |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3.               | The Plans are herebyamended such that upon an optionee's Retirement, he or she shallhave until (a) five years after the date of Retirement or (b) theexpiration of the original term of such employee's option,whichever date occurs first, to exercise a stock option grantedunder the Plans.  During such period after Retirement, anystock option shares that have not vested as of the date ofRetirement shall continue to be eligible for future vesting inaccordance with the vesting schedule for such stock option. The foregoing amendment will be effective for all stock optionsgranted on or after March 22, 2002, and for all stock optionsgranted before March 22, 2002 that are "underwater" as of March 22,2002 (i.e., those stock options with an exercise price of greaterthan $27.21).  The foregoing amendment does not amend stockoptions granted before March 22, 2002 that are "in-the-money" as ofMarch 22, 2002 (i.e., those stock options with an exercise priceequal to or less than $27.21); provided, however, that the Boardshall have discretion to so amend such in-the-money options at suchtime when those options become underwater. |
| 4.      | The Plans are herebyamended such that if a non-employee director ceases to be adirector for the Company at age 55 with at least 10 years ofservice or at age 62 (in either case, the "Cessation Date"), he orshe shall have until (a) five years after the Cessation Date or (b)the expiration of the original term of such director's option,whichever date occurs first, to exercise a stock option grantedunder the Plans.  During such period after the Cessation Date,any stock option shares that have not vested as of the CessationDate shall continue to be eligible for future vesting in accordancewith the vesting schedule for such stock option. The foregoingamendment will be effective for all stock options granted tonon-employee directors on or after March 22, 2002, and for allstock options granted to non-employee directors before March 22,2002 that are "underwater" as of March 22, 2002.  Theforegoing amendment does not amend stock options granted beforeMarch 22, 2002 that are "in-the-money" as of March 22,2002. |
|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 5.      | The Plans are furtheramended such that upon an optionee's death or Total Disability, theoptionee or the optionee's estate, as the case may be, shall haveuntil (a) three years after the optionee's death or TotalDisability or (b) the expiration of the original term of suchoptionee's option, whichever date occurs first, to exercise avested stock option granted under any of the Plans.  Any stockoption shares that have not vested as of the date of death or TotalDisability, shall be terminated and shall not be eligible forfuture vesting.  The foregoing amendment will be effective forall stock options granted on or after March 22, 2002 and all stockoptions granted before March 22, 2002 that are underwater as ofMarch 2002.  The foregoing amendment does not amend stockoptions granted before March 22, 2002 that are in-the-money as ofMarch 22, 2002; provided, however, that the Board shall havediscretion to so amend such in-the-money options at such time whenthose options become underwater.                |

----

30

Exhibit99.1

**Certification of CEO and CFO Regarding Quarterly Report on Form 10-Q For the Quarter Ended June 30, 2002**

           Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18U.S.C. Section 1350, as adopted), Robert G. Funari, Chief ExecutiveOfficer of Syncor International Corporation (the "Company"), andWilliam P. Forster, Chief Financial Officer of the Company, herebycertify that, to the best of their knowledge,
|          | 1.      | The Company's QuarterlyReport on Form 10-Q for the period ended June 30, 2002 (the"Covered Report"), which this Certification accompanies, fullycomplies with the requirements of Section 13(a) or Section 15(d) ofthe Securities Exchange Act of 1934; and                 |
|--------------------------------------------------|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                  |                                                                                                                                                                                                                                                                             |
|          | 2.      | The information containedin the Covered Report fairly presents, in all material respects,the financial condition of the Company at the end of the periodcovered by the Covered Report and results of operations of theCompany for the period covered by the Covered Report. |

Dated:  August 14,2002
|                                                                   | /s/ Robert G.Funari                                         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                        | Robert G.Funari                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                        | President and ChiefExecutive Officer                                                                                                                                                                                                                                |
|                                                                   | /s/ William P.Forster                                       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                        | William P.Forster                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                        | Sr. Vice President andChief Financial Officer                                                                                                                                                                                                             |

    

  

****

This certificationaccompanies the Report pursuant to §906 of the Sarbanes-OxleyAct of 2002 and shall not, except to the extent required by theSarbanes-Oxley Act of 2002, be deemed filed by the Company forpurposes of §18 of the Securities Exchange Act of 1934, asamended.

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31